Deposit cheque 'by photo on phone'

People will be able to pay in a cheque simply by photographing it on their smartphone or tablet under new Government legislation.

Measures contained in the Small Business, Enterprise and Employment Bill will allow banks and building societies to process a cheque without needing to physically receive it.

The move means that someone sitting in their armchair at home will be able to send their bank a photo of their cheque which it can then pass on electronically to the paying bank to check against their records.

A previous consultation launched by the Government said that the way cheques are currently processed creates "delay and expense".

When paper cheques are paid into banks, they end up going on a journey around the country, travelling to the clearing centres of both the bank collecting the cheque and the paying bank so that sort codes, account numbers, and signatures can be checked for fraud and to establish there are sufficient funds.

While under the current system a cheque recipient has to be able to withdraw funds four days after paying it in, the cheque can still bounce after this period and it is only on the sixth day after payment that they can be sure the money is theirs.

The move would also enable smaller firms, which tend to rely more heavily on cheques, to pay them in later in the day as they will not be relying on the bank having to physically courier the cheque in order for the payment to start being processed.

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Sole traders and the smallest firms make over a fifth of their outgoing payments in cheques.

People will still be able to deposit cheques at bank branches, cash machines and by post as well as having the option of "cheque imaging".

The plans were first announced in December and as part of them Barclays has been piloting technology to enable its customers to scan in cheques.

Steven Roberts, director for transformation at Barclays, said the youngest customer who has used the technology so far is aged 17 and the oldest is 67.

He said: "This is an opportunity to move cheques into the 21st century, to reduce costs and make banking easier and more convenient for customers.

"We look forward to working closely with other banks, industry groups and the Treasury to make this a universal nationwide service as quickly as possible, so that all customers with a cheque to deposit can do so through their phone, tablet, branch or self-service device, regardless of who they bank with."

Plans to kill off cheques from 2018 were ditched a few years ago after the UK Payments Council faced an outcry from MPs, small businesses, charities and pensioner lobby groups, who said the needs of millions of vulnerable people were being ignored.

Despite the increasing popularity of new technologies such as online banking and mobile payments, nearly £840 billion of cheques were processed in 2012.

Economic Secretary to the Treasury Andrea Leadsom said consumers and businesses should have "far greater choice in banking services".

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